Bob B. Hamilton

Be Careful and Creative as your Look at Freight Costs

While you cannot afford to sacrifice the quality of the wholesale dollar merchandise you sell in your store, you must also develop strategies to facilitate cost control.  Better yet, you must define and execute actions which lead to not only maintaining costs levels, but actually result in cost reduction. 

While you cannot afford to sacrifice the quality of the wholesale dollar merchandise you sell in your store, you must also develop strategies to facilitate cost control.  Better yet, you must define and execute actions which lead to not only maintaining costs levels, but actually result in cost reduction.  One cost of goods related expense which must be continually placed under the microscope is the cost of freight.  You must always be on the lookout for actions which can help shave pennies or dollars.  In this article I review six proven actions which can help contribute to lowered freight costs.

#1) Fill pallets to the top -> Establish a list of filler items which you always need.  Then use these as filler to create a pallet which is loaded clear to the top of the truck.  For example cartons filled with paper napkins and bathroom tissue are both light and bulky.  They are also in-demand and sell well.  As a result they work extremely well for this purpose.

#2) Combine loads ->Rather than ordering and paying freight for one pallet from wholesale dollar merchandise supplier ‘A’ and another pallet from suppliers ‘B’ and ‘C’ see about combining them into a single load of three pallets.

#3) Buy locally ->Generally you will find the lower the number of miles your wholesale dollar merchandise is hauled the lower the cost for freight.  In some cases you may be able to haul the items yourself to save even more.

#4) Negotiate a freight contract ->As you begin to understand your actual sales and the amount of wholesale dollar merchandise required to replenish after those sales, you can begin to negotiate with freight companies or freight brokers and forwarders to establish a lower set amount you will pay per pallet.

#5) Delay ordering until you positively impact freight => This strategy does carry some risk, especially if you do not have accurate information to determine the very last minute to order and still have the hottest selling items in-stock for customers until the new merchandise arrives.  However delaying the order date also allows you to build bigger orders as sales across your store occur.  Typically more pallets of merchandise mean lower per pallet costs.  

#6) Negotiate freight caps or paid-freight with suppliers ->This strategy will work only in a limited number of cases.  As costs increase at all levels, your suppliers will be less able to help.  However specialty suppliers and some general suppliers may be able to offer some relief when very large orders are involved.  The only way to know for sure is to ask!

Not every one of the creative ideas above will work in every case.  While some suppliers may be willing to place a cap on freight, others may be willing to hold and load pallets of merchandise you purchase from their competitors.  It does not matter which of these actions you utilize.  The important thing is to develop a cost-cutting list and work to gain concessions of one type or another from all of your wholesale dollar merchandise suppliers.

Article Tags: Wholesale Dollar

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